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Here’s Why You Should Buy Oasis Petroleum (OAS) Right Now


On Oct 12, Oasis Petroleum Inc. OAS was raised to a Zacks Rank #2 (Buy), implying that the stock will outperform the broader U.S. equity market over the next one to three months.

Why the Upgrade?

Over the past 30 days, the Zacks Consensus Estimate for the company’s 2018 earnings per share has been revised from 45 cents to 47 cents. The same for 2019 earnings moved up to 98 cents from 92 cents over the same time frame. Moreover, the upstream energy player managed to beat the Zacks Consensus Estimate for earnings in each of the prior four quarters, the average positive earnings surprise being 81.4%.

Oasis Petroleum is among the leading oil and natural gas explorers and producers with focus primarily on the Bakken shale play and Three Forks formations. With significant acreage positions in those unconventional resources along with huge inventory of drilling locations, the company is well positioned to boost oil and gas production.

Since more than 76% of total production comprises oil, Oasis Petroleum has been capitalizing on the significant recovery in oil prices. From hitting the historic low mark of below $30 per barrel in early 2016, the price of West Texas Intermediate (WTI) crude has recovered more than 137%.

Importantly, the highly favorable exploration and production business scenario will likely help the company to reach its goal of reporting positive free cashflow in 2018 and 2019.

Oasis Petroleum’s pricing chart looks impressive. Over the past year, the stock rallied has 42.5%, outperforming the 10% collective gain of the stocks belonging to the industry.

Other Stocks to Consider

Other top-ranked players in the energy sector are Shell Midstream Partners LP SHLX, Petroleo Brasileiro S.A. or Petrobras PBR and Chevron Corp. CVX, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shell Midstream Partners recorded an average positive earnings surprise of 7.9% for the last four quarters.

Petrobras’ bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.4%.

Chevron will likely post earnings growth of 122.9% and 19.4% in 2018 and 2019, respectively.

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